Neal Pollack: 'I'm a celebrity, get me equity'

This article was taken from the June 2013 issue
of Wired magazine. Be the first to read Wired's articles in print
before they're posted online, and get your hands on loads of
additional content by subscribing online.

I have spent quite a bitof time recently trying to get people to tell me
why it's a good idea for celebrities to invest in tech companies.
Universally, the answer has been: unless that celebrity is Ashton
Kutcher, it's really not. Ever since Kutcher made a splash a few
years ago by investing in hot properties such as Foursquare and Airbnb, there's been
a gold rush of the famous trying to get in on
tech.

"You can't go into a tech
company because you're an A-list celebrity in Hollywood and expect
them to swoon"

Michael Schneider

The story of celebrity tech investments is one
littered with bad choices. Yes, Bono gave money to Dropbox (his investment group, Elevation
Partners, was also an early Facebook investor). But Leonardo
DiCaprio led a $4 million (£2.6m) investment round in the New
York-based -photosharing app Mobli. Remember that? Bruno Mars
poured $2 million (£1.3 million) into something called Chromatik.
Justin Bieber invested in Spotify, but also in never-to-be-heard-from-again Tinychat
and Stamped. Former MySpace executive Josh Brooks managed to
persuade Selena Gomez's empire to back his ill-fated Postcards on
the Run project. And Justin Timberlake has dropped money down
seemingly endless micro-video platform holes. Their investments
have vanished like tweets in the night.

"There's no apparent reason why we should assume
celebrities are going to make good investment choices," Paul
Kedrosky, an angel investor and senior fellow at the Kauffman
Foundation, told me. "They tend to show up late, have too much
money, and be overeager to spend it."

It's rare, Kedrosky says, that celebrities have
anything of value to offer a tech company, other than their
name. "It's completely natural and obvious that, if you only
care about awareness, then you need to get people involved who
drive awareness," he says. "Short of serial killers, it's
celebrities." Name recognition only goes so far, and if you don't
have a compelling or unique product or service to sell, all
the celebrity wattage in the world isn't going to save
you.

Michael Schneider, the LA-basedfounder of successful
app company Mobile Roadie,
took investment from Ashton Kutcher and his partner (and Madonna's
manager), Guy Oseary, in 2009. But that money came with a wealth of
tech expertise and knowledge, not to mention almost infinite
connections to potential clients. That's a rare case. "There are
certain guys in the entertainment business for whom tech is the
cool thing to do," Schneider says. "They want to repeat Ashton's
model, but they don't get that [the likes of Kutcher] are more than
money. There are very few people interested in making their
involvement matter and really getting what the company does. You
can't go into a tech company because you're an A-list celebrity in
Hollywood and expect them to swoon."

Troy Carter ( Wired 06.12), Lady Gaga's manager and a highly successful tech
investor in his own right, says that except in very particular
cases, -celebrity money and endorsements don't help tech products.
"If an app doesn't entertain them or make some process easier, if
it doesn't solve a problem, people will stop using it," he says.
"It doesn't make a difference whether their favourite celebrity is
using it or not."

The stardust tech bubble may have
reached its apotheosis last November, when Ben Parr, a former
blogger for Mashable, announced the formation of the #DominateFund, with the hashtag included in its name. The fund
would use the founders' star connections as a way to gather
micro-venture seed capital for startup -companies. Four months
later, they refuse to publicly announce any celebrities, or any
investments. That's because, as this particular tech bubble begins
to deflate, there are none of- significance to be found. "It's
classic predatory behaviour in a collapsing ecosystem," Kedrosky
says. "There are things dying all over the forest floor. People are
trying to come in and collect as much as they can."